While I was promoting The Millionaire Next Door on the Oprah Winfrey Show, a rather well dressed woman from the audience asked me the same question I had heard a thousand times before: "What good does it do to have all this money if you don't spend it?" The woman was agitated, even indignant, that I was touting frugality. She further indicated that "these people couldn't possibly be happy." She, like most people who are not wealthy, believed that the more one spends, the more satisfying life is. Thus, more money translates into more spending and therefore more happiness. But she does not completely understand the benefits of being wealthy. It has much more to do with being financially independent and secure than owning prestige brands. High self-esteem is related to achieving financial independence. Both the sense of achievement that comes from success and financial independence lead to happiness and life satisfaction, not meaningless badges.What percentage of the millionaires who live in homes valued at under $400,000 are happy? More than 9 in 10 (91%) indicate that they are extremely satisfied with life.

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What explains happiness in life? I don't have all the answers. But, as a review of both my books and blogs, happiness in life has little to do with the brand/price of the watch one wears, the stores one patronizes, the make of car one drives or the brand of vodka one consumes. One's overall happines in life has nothing to do with the overall price one pays for wine, the size or market value of a home, not even the price one pays for a haircut.

To shed more light on this issue, I examined the relationship between happiness in life and more than 200 characteristics, behaviors and attitudes of 1,574 high income/high net worth respondents from one of my national surveys. Note that correlations do not necessarily indicate cause and effect.
Beyond health, family and job factors, why are some people more satisfied with life than others? In terms of statistical significance, the higher one's level of happiness the more likely he/she is to agree with the following statements [by rank order of variation explained]:

1. I have more wealth than most people in my wealth/income group.
2. We are financially better off than our neighbors.
3. I donated 5% or more of my income last year to charity.
4. I live well below my means.
5. I was raised in an atmosphere filled with love and harmony.
6. My parents taught me how to invest and manage money.
7. Politically, I am more conservative than liberal.
8. I inherited less than 1% of my net worth.
9. My spouse is more frugal than I am.
10. I invested 10% or more of my income last year.
Also note that both net worth and income are associated with happiness. Statistically, net worth is the more important of the two. But even more important than net worth is relative net worth (as suggested in Item 1 above). Relative net worth is all about how productive one is in transforming his/her income into net worth compared to others in one's income and age cohort as well as within the context of one's neighborhood environment.

Those who can easily afford their consumption lifestyle tend to be significantly happier than those who struggle to make ends meet by acting rich. I have consistently found that those within the same income/age cohorts who were raised by loving and nurturing parents tend to spend less and save more of their incomes than those who are not raised in this type of atmosphere.

But she does not completely understand the benefits of being wealthy. It has much more to do with being financially independent and secure than owning prestige brands. High self-esteem is related to achieving financial independence. Both the sense of achievement that comes from success and financial independence lead to happiness and life satisfaction, not meaningless badges.What percentage of the millionaires who live in homes valued at under $400,000 are happy? More than 9 in 10 (91%) indicate that they are extremely satisfied with life.

That is so true. Often the very wealthy folks that I have met could afford Rolexes but don't like that brand, and prefer a simple Timex, for example.

And as for houses - - it all depends on housing prices where you live, but I'd jump off a cliff if I had to own one of the $400K+ homes in my area. That is just too much home for me to have to deal with, and I only really use about half the square footage that I already have for less than half that price.

__________________Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

Having an extra $9 in my bank account makes me more happy than having a pack of cigarettes, so I don't buy them. Other people are more happy having the cigarettes than the money, otherwise they wouldn't buy them

That can be applied to every purchasing decision. If someone disagrees with that, they should offer something more than "you're wrong"

I like the part about having a $1 mil IRA and shopping at the Salvation Army Family Store (only on sale days of course).

heh heh heh - the shear joy of being a cheap SOB has to be experienced to be believed. .

But there is this vicious rumor going around that you can't take it with you.

We were at the Salvation Army just yesterday. They have some pretty nice stuff in there compared with the quality years ago. And the prices are very reasonable even though it wasn't a sale day. We didn't buy anything, though, since we are more interested in donating right now.

__________________Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

I got a mysterious letter from some corporate legal/HR flack today regarding some urgent business conduct issue that she needs to speak to me one on one. I don't think I surfed porn on my computer (too busy at work), so for the life of me, I can't fathom for what it is. Then again, the project I run has dozens of contracts with external companies, friends and enemies throughout the company, and significant exposure worldwide, so I could have pissed off someone without knowing it. If at any time the conversation turns into a modern day version of the Salem witch hunt, I'll just tell her to bend over really far and kiss her own ass, and she can take over the project so that she can enjoy being on midnight calls with India. I'm off to bumming around Southeast Asia and getting me self some much-needed brown honey. :0

I got a mysterious letter from some corporate legal/HR flack today regarding some urgent business conduct issue that she needs to speak to me one on one. I don't think I surfed porn on my computer (too busy at work), so for the life of me, I can't fathom for what it is. Then again, the project I run has dozens of contracts with external companies, friends and enemies throughout the company, and significant exposure worldwide, so I could have pissed off someone without knowing it. If at any time the conversation turns into a modern day version of the Salem witch hunt, I'll just tell her to bend over really far and kiss her own ass, and she can take over the project so that she can enjoy being on midnight calls with India. I'm off to bumming around Southeast Asia and getting me self some much-needed brown honey. :0

Well, I can certainly see the connection to the Life Satisfaction and Stress parts of the OP thread tittle. The connection to the frugality part however is somewhat mystifying...

What explains happiness in life? I don't have all the answers. But, as a review of both my books and blogs, happiness in life has little to do with the brand/price of the watch one wears, the stores one patronizes, the make of car one drives or the brand of vodka one consumes. One's overall happines in life has nothing to do with the overall price one pays for wine, the size or market value of a home, not even the price one pays for a haircut.

To shed more light on this issue, I examined the relationship between happiness in life and more than 200 characteristics, behaviors and attitudes of 1,574 high income/high net worth respondents from one of my national surveys. Note that correlations do not necessarily indicate cause and effect.
Beyond health, family and job factors, why are some people more satisfied with life than others? In terms of statistical significance, the higher one's level of happiness the more likely he/she is to agree with the following statements [by rank order of variation explained]:

1. I have more wealth than most people in my wealth/income group.
2. We are financially better off than our neighbors.
3. I donated 5% or more of my income last year to charity.
4. I live well below my means.
5. I was raised in an atmosphere filled with love and harmony.
6. My parents taught me how to invest and manage money.
7. Politically, I am more conservative than liberal.
8. I inherited less than 1% of my net worth.
9. My spouse is more frugal than I am.
10. I invested 10% or more of my income last year.
Also note that both net worth and income are associated with happiness. Statistically, net worth is the more important of the two. But even more important than net worth is relative net worth (as suggested in Item 1 above). Relative net worth is all about how productive one is in transforming his/her income into net worth compared to others in one's income and age cohort as well as within the context of one's neighborhood environment.

Those who can easily afford their consumption lifestyle tend to be significantly happier than those who struggle to make ends meet by acting rich. I have consistently found that those within the same income/age cohorts who were raised by loving and nurturing parents tend to spend less and save more of their incomes than those who are not raised in this type of atmosphere.

Perhaps it's readily apparent from comments and embedded quotes above (if not from any number of previous threads here), but a key point about frugal living (and here I'm using "frugal" only in the fullest positive sense of the empowering habit of living beneath your means - not cheapskate, not deprivation, etc., per another recent thread - just dealing with your situation and learning to be happy with enough - however you choose to define that), is that it works both sides of the equation. By definition, living beneath your means is a requisite condition for accumulating wealth; i.e. if you spend all your resources, you won't have anything left to accumulate, and if you spend even more you end up a slave to debt. So frugal living and investing the difference "will get you there", whereas the alternatives definitely will not. At the same time, living beneath your means "lowers the bar" for the target level of ongoing expenses that will need to be met by future income streams from whatever wealth you are able to accumulate - making it easier to "get there" than doing otherwise. That seems less stressful to me on both counts, during accumulation and once you've started withdrawals. I would think it very empowering (and therfore stress reducing) over time for just about anyone.

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